Quality Of Information Disclosure, Financing Constraints And Financing Options

According to the classical financial theory, the company’s external financing and internal financing is no difference in a perfect capital market, so the company’s financing behavior will not be affected by the company’s financial situation, and only related to the company’s financing needs. But this theoretical perfect capital market does not exist in reality. According to the financing constraints theory, because of the asymmetric information on the market, the cost of external financing is higher than the cost of internal financing in the company’s financing process. The differences between internal and external financing costs, not only affect the resource allocation efficiency of capital markets, but also affect the company’s financing activities. Meanwhile, the companies’ accounting information disclosure in the market can improve the degree of asymmetry of information and reduce agency costs, thus alleviating financing constraints, affecting the financing decision.At first, this paper cards the influencing factors of financing constraints, using GMM methods to build a WW index to measure the companies’financing constraints. Second, studying how to alleviate the financing constraints from the aspects of asymmetric information and agency cost, proving that the improvement of information disclosure quality can effectively improve the degree of information asymmetry and reduce agency costs, so coming to a conclusion that high quality information disclosure can effectively alleviate the financing constraints. Again, this paper uses the linear model, discussing the companies’ financing tendency when facing the financing constraints, and the changes of financing tendency under the different quality of information disclosure, making the conclusion that companies tend to choose internal financing when facing the financing constraints and high-quality information disclosure can weaken this tendency. Finally, this paper uses Logistic model to do robustness test on the conclusion.